A sample of 60 mutual funds was taken and the mean return in the sample was 13%

Question

A sample of 60 mutual funds was taken and the mean return in the sample was 13% with a standard deviation of 6.9%. The return on a particular index of stocks (against which the mutual funds are compared) was 11.5%. Therefore, the test statistic is 1.68. When testing the hypothesis that the average return on actively-managed mutual funds is higher than the return on an index of stocks, if the critical value is 1.28, what is your conclusion concerning the null hypothesis?                                                                                 Reject the null hypothesis                                                                                  Fail to reject the null hypothesis                                                  

Explanation / Answer

Since the test statistic is 1.68 is larger than the critical value of 1.28, we reject the null hypothesis.

So answer is Reject the null hypothesis

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